Tories accuse Darling of ‘giant con’ over taxes

ALISTAIR DARLING came under fire from the Tories today after he appeared to hint that taxes will rise in the long term to fund the Government's borrowing spree.

The Chancellor signalled that Britain will suffer a short, sharp recession, claiming that it would bounce back into growth in 2010.

But in a newspaper interview, he also suggested that taxes would have to go up to fund rising borrowing, stating "at some stage you have to pay for it".

Shadow chancellor George Osborne seized on his remarks today. "The truth is now coming out," he said.

"First the Employment Minister told us that taxes would have to rise to pay for any unfunded tax cut. Now the Chancellor has hinted that under the Prime Minister's plan, taxes would have to rise.

"Only the Prime Minister refuses to admit that what he is proposing is not a tax cut but a giant tax con. Once again he is taking the British people for fools."

In the first real glimpse at this month's pre-Budget report, Mr Darling today seized on forecasts by the Bank of England that growth will bounce back in 2010 after the nation weathers the downturn.

He suggested that the economy would contract by more than one per cent next year but recover within 12 months.

But the Government's confidence in the resilience of the economy came under fire when former prime minister Sir John Major unleashed a savage attack on Labour's failure to prepare for bad times.

Sir John said that "new Labour has as much financial blood on its hands as any erring banker", pointing out that Mr Brown ignored spiralling debt, weakened regulation of the City and fuelled the housing boom.

In an interview with the Independent, Mr Darling said: "We are going into recession. I remain confident that we will get through it."

The Chancellor made clear that his Commons statement on 24 November will reveal a dramatic increase in borrowing, expecting to soar from £43 billion to more than £65 billion. As the recession hits, borrowing will soar above £90 billion.

Bank of England Governor Mervyn King warned yesterday that Britain faced an even sharper recession than that of the early Nineties. Mr Darling said: "The Bank of England expects the economy to come back out of it in 2010. I think things are difficult but I remain confident we will get through it. There is a way to go yet. There will be a few bumps on the way.

"We have had 10 years of very solid growth in this country. We reduced the debt we inherited and spent money where it was needed We also go into this period with interest rates the lowest since the year after I was born [1953]. Inflation is coming back down."